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A Guide to Value-Added Taxes

A global look at value-added taxes -- and how to get a refund

Keeping tabs on VAT

Rules for value-added taxes change frequently -- very frequently, according to Nancy Eide, co-owner of Omaha-based CEI VAT Reclaim, who checks rates on a monthly basis.

Eide says that in many cases the changes aren't publicized, and planners won't find out about them until their VAT rebate request gets rejected.

While the best resource for keeping tabs on VAT changes are VAT experts such as Eide, planners interviewed for this story also have consulted local CVBs, national tourism offices, hoteliers and destination management companies, which keep up-to-date on the latest VAT news for the destination.

Following is a rundown of some recent VAT changes of interest to planners:

• Germany. Last year, VAT on hotel rooms was reduced from 19 percent to 7 percent.

• United Kingdom. In January, the VAT rate increased from 17.5 percent to 20 percent.

• Sweden. According to Meridian Global Services, a White Plains, N.Y.-based VAT firm, Sweden plans to reduce its restaurant VAT from 25 percent to 12 percent in January 2012, in a bid to create jobs in the restaurant industry and to boost tourism.

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For planners of events held outside the United States, understanding the ins and outs of value-added tax -- the surcharge levied on various goods and services in more than 140 countries -- can be a daunting prospect. That's largely because there are no universal standards for administering the tax (which does not exist in the U.S.).

To many a planner's consternation, each country has its own VAT rate, rules on what meeting components VAT is applied to, types of event-related goods and services that are eligible for rebates (typically hotels, food and beverage, venue rental and audiovisual rentals), types of meetings that warrant refunds (e.g., an incentive program vs. a sales meetings), filing procedures and deadlines.

However, experts say that regardless of what VAT-charging country an event is held in, there are basic steps meeting planners can take to ensure they follow the correct protocol and recoup any fees -- which top out at a whopping 25 percent in Iceland, Norway and Sweden -- that they are entitled to.

Where VAT matters When planning an international meeting, convention, incentive trip or trade show, and when VAT is an important consideration in site selection, experts recommend that planners do some preliminary research.

Naturally, an initial step is to determine whether the destination offers VAT rebates to U.S. firms holding an event on its shores. Most nations that do are in Europe, but not all: Italy and Spain, for example, do not.

To find out the most up-to-date VAT rates in specific countries, contact national tourism organizations, convention and visitor bureaus, and suppliers.

Any research will quickly reveal the discrepancy in rates from country to country. For example, the VAT on hotel rooms in France is 5.5 percent, while in United Kingdom, it's 20 percent. Both countries offer rebates, but theoretically, a planner will lay out less cash up front under the French system. For more specific country-by-country data, see "Where the Refunds Are."

Most countries outside of Europe -- the Caribbean nations, Central and South America, China, India and Singapore, among them -- charge some form of VAT but do not allow U.S. firms to recover the tax.

Others, such as Australia, Japan and South Korea, offer limited rebates on very specific types of meetings, but their requirements, including documentation, are extremely complex, according to Zdenek Vajnlich, senior VAT manager at White Plains, N.Y.-based Meridian Global Services.

In South Korea, for example, no VAT refund is available for foreign companies renting venues in Korea, while, according to Sung K. Kim, MICE manager for the Korean Tourism Organization in New York, the policy for other costs, such as A/V rentals or destination management services, "is complex and cannot be generalized."

Within North Amer­ica, Mexico stopped levying a VAT in 2005 and instead waives that amount -- usually about 10 percent -- at the outset rather than charge and rebate it (pure incentive programs do not count in this policy). For full details, contact the Mexico Tourism Board.

Rebates of Canadian VAT -- called the goods and services tax or GST -- are rare, and it is very difficult for U.S. events to qualify for them, says Nancy Eide, co-owner of Omaha-based CEI VAT Reclaim. She points out that in addition to the GST, Canada has a provincial sales tax of 7 or 8 percent, depending on where it is charged, which can be reclaimed, but only in some provinces, including Québec. For information on tax rebates available for a specific event, contact the Canada Revenue Agency.

The type of event a U.S. firm wants to hold in a foreign land can affect its rebate eligibility. For example, Ireland rebates most costs associated with a trade show or sales meeting, but not an incentive program. According to Nancy Eide, countries that do allow incentive-program VAT refunds include Denmark, Finland, France, Germany, Iceland, Malta, Monaco, Netherlands, Norway and the U.K. Contact local tourism officials for specific details on how much of a refund U.S. firms are eligible for based on meeting type.